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I sincerely hope the market is not willing to value this sort of deal at a P/E ratio anywhere near 94.

Off the top of my head, there is a very well established business involving buying expensive things and leasing them to the companies that intend to operate them so they can sell services: aircraft leasing.

AER is the biggest player and they have a P/E ratio of, drumroll please, 6. And I expect that GPUs, despite currently looking like an appreciating asset, will actually depreciate faster than aircraft in the long run.

> Truly a brilliant deal for everyone involved.

Except for people who have pensions/investments in whole market class investments who become exposed to an over valued company with a propped up value.

> If SpaceX maintains this revenue multiplier

Yeah, if a ridiculous premise is given you'll reach a ridiculous result.

> SpaceX is trading at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then the single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars.

That final number doesn't make sense: if you're trading shares at $X revenue, increasing the revenue by $Y multiplier doesn't increase the share price by the same multiplier.

SpaceX is valued at that revenue multiple because of its expected revenue growth rate.

This deal is part of that revenue growth. So the new revenue would be already partially or even fully priced-in.

Perhaps it reduces uncertainty around the growth rate, but expectations were already sky-high, as shown by the multiple!

> masterful piece of financial engineering

Love how we assign positive adjectives to unethical practices by corporates

> and makes 50 billion

assuming google sells, the stock tanks, nobody wants to buy next year

is this masterful? more like a scam

Now with this incredible deal, SpaceX is now GAAP profitable under the existing rules, and they get to join the index next year without a rule change.

Didn't they also run up against a "minimum free float" rule?

> Truly a brilliant deal for everyone involved.

Same thing they used to say about Lehman.

So SpaceX is selling inference capacity. Who else is? What were the competing offers for Google and Anthropic?

I don’t think your math is correct. Profit is revenues minus expenses. Unless Google’s purchase of compute brings SpaceX’s revenues into profit territory (such that their total revenues exceed their expenses), SpaceX still won’t be profitable. This is accounting 101.

Google’s investment in SpaceX is completely orthogonal to the analysis. Equity investments aren’t revenue.

For your math to make sense, Google would have to sell its stake this year

There may be more to it than buying compute but what you're saying does not make sense for Google. More likely Google wants a good relationship with SpaceX and possibly to buoy the stock, but it's a bad NPV trade

They still need 10% float and 1 year of bake time, so the rules are still doing some work for us

Isn’t the revenue modifier a result and not the cause?

Would you really expect a company to increase proportionally in value when they increase their revenue?

> this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars

That's not how valuations work. Also, it is not unlikely that SpaceX's valuation drops post-IPO (tech was 6.65% in the most recent trading session) due to its very rich valuation and a long tenured investor based that is probably looking to get liquid.

Google is renting compute from SpaceX because they need GPUs and SpaceX owns a huge supply of them and has excess capacity bc no one uses Grok. Google has stated that this is a temporary arrangement while they continue to build out their own capacity.

why revenue that barely cover the estimated revenue (and depending on assets yet to be acquired) boost valuation? is everyone an idiot?

Utterly nauseating. Why would google help prop up this company and its figurehead? Maybe this is finally the straw that breaks the camel’s back for me and google.

So masterful that a random guy on HN can see right through it.

Let’s just call it what it is. It’s just basic fraud. They created a very temporary revenue injection right around the time of the IPO to defraud investors as much as they possibly can. Some businesses do this kind of thing just before they die because…why not?

Except they’re paying $30b (the deal is signed for almost 3 years), there’s no reason to believe that SpaceX maintains revenue multiples and this deal creates a trillion in value, liquid cash is not the same as pre-IPO shares. And finally, the deal comes down to $11 per hour of h100 equivalent, which is pretty much within market which experiences a severe lack of supply.

Do you really think its honest to call this Financial Engineering over Fraud?

prompt engineering, harness engineering, agentic engineering, financial engineering

AI is really a pioneering engineering field

TSLA has a forward PE of ~200x. That is probably the most logical comparison with SpaceX. Proof that the market can stay irrational for quite a long time.

It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, no touch), but the world we live in today makes me have real doubts that the next few decades will look anything like the last few.

Circular financing at its finest. And Self-dealing between the hyperscalers, openai, and anthropic.

google invests in anthropic and spacex - and shows appreciated values as earnings. Then it turns around and rents tpus to anthropic to show it as revenues. The main buyers and sellers for all of this are the hyperscalers, openai and anthropic.

It is a game of musical chairs while the party is still on.

Do companies like Uber, Tesla, etc ever intend to pay dividends? If a stock never intends to pay dividends, the value of the stock is simply the price the next shumck is willing to pay.

Financial shenanigans aside, xAI seems to be buying hardware at breakneck speed. So why not?

https://techcrunch.com/2026/05/20/musks-xai-is-being-sued-ov...

I thought elon hates demis

> Google renting infra from xAI, I did not see that coming.

Actually that seems to be fairly logical? Hardware is what xAI has, and it's in great demand. So sell what makes you money. The real story here is that that xAI hardware is going to be running Gemini and not Grok. Which is to say: Grok basically failed as a frontier AI and they need to pivot to a business model which makes money.

Obviously not everything Musk did was wrong. xAI bought a ton of compute when it was possible to get it. But the product they were going to build with it failed and so now they're deciding to be a landlord.

This IPO is just insane. No way do you justify a $trillion+ valuation based on what amounts to a bunch of commoditized rent seeking endeavors. Datacenters are buildings and chips, and everyone can build those. Starlink is just an ISP with lots of competition at scale (they have the high bandwidth mobile market cornered, but that's a very small market!). Mars is at best a grift on public funding. Even satellite launch services are commoditized and competetive these days.

They're struggling.

The future needs more AI compute. No one has enough AI compute.

Memory chip vendors are betting hard on this being a temporary state of affairs that doesn't last, and doesn't warrant commissioning a shitton of new memory foundries.

Musk is betting hard on this staying that way, and is putting the next Colossus into the last place not corrupted by NIMBYs... SPACE!

But what is xAI? I thought that was the company that had the compute + Grok, the AI company? Since when does SpaceX (which I thought was a space company?) own AI-compute hardware and/or can do model hosting? Are all of Musks companies just one big thing now where the names no longer matter, or how is it supposed to work?

Edit: seems I'm just a bit behind: "xAI — now part of SpaceX ", seems really strange for a space company to buy an AI company, but I guess rather that, than the other way around.

It has nothing to do with Grok, at least not the current iteration. SpaceX is the only company that can concievably launch large scale orbital compute.

Maybe that was the handshake deal from twitter financing, twitter exit and so on. "I will make you whole".

I do not know, but I wonder if someone can tally the bankers from twitter buy, twitter merge into xAI and the new spaceX launch.

Well, Elon seems to take the fastest path possible to these DCs. One can envision a future where these get shut down for the severity of the pollution, not to mention being built and operated illegally [0].

[0] https://www.selc.org/news/xai-built-an-illegal-power-plant-t...

> Is there any data on whether Google, Amazon, Microsoft, Anthropic, OpenAI etc are most cost efficient in getting datacenter compute online and operating it?

Well considering that ~80% of the price is hardware deprecation, I don't know why they'd be considerably worse than anyone else at negotiating hardware deals.

Typically when you buy in bulk, you have more sway.

Companies like Google also have in-house chips like TPUs that are substantially cheaper for inference for them to make than anyone else can get through Nvidia.

I’ve seen some numbers related to datacenters in Ireland and they would stress price per MW as a way to see where to build them. But then you have depreciation of equipment as well. Depreciation can be played with when filing taxes though.

I don't think they are most efficient for small GPUs. I think they might only be the one which have capex and certainty required for multimillion dollar purchase of GB200 NVL72 or something of that scale.

that's asking the cart before the horse; is there any data on what compute actually results in real GDP improvements?

Why would you want to own your own giant datacenter? What would you do with it? Of course it's expensive to operate a datacenter that serves millions of people. Would you expect otherwise?

plus $473 per second from Anthropic

> As part of that deal, Anthropic agreed to pay SpaceX $1.25 billion per month through 2029 to rent all the available compute from its Colossus 1 data center near Memphis, Tennessee, that xAI — now part of SpaceX — originally built for its own artificial intelligence efforts.

I don't get why SpaceX is going public. But anyway, well played, the whole crypto mining that dried out GPUs back in the day seems tiny now.

For context, Alphabet earns ~$12k/sec.

They acquired xAI

Either that or SpaceX is permanently turning xAI's assets into a neocloud because xAI itself has no traction.

The whole thing looks rather desperate. I wonder what SpaceX's margins are on these contracts.

Didn't Anthropic pull the same in both ways? you pull me up I pull you up kind of deal? Sounds like SpaceX bought themselves some time up to Q4, which is not the case of Anthropic and even worse for OpenAI. Not counting that none of them got their S&P500 fast-track ticket.

why would Google help a competitor like that, though?

Feels like these IPOs are thankfully the top coming before the AI crash and we get back to the real world.

Everything is a conspiracy now.

Of course this is a real deal. Compute is the most valuable resource in the world for these companies at the moment.

Their satellite internet business is the only thing which makes them money, which is enabled by their orbital launch business which is as of right now not profitable and I have no idea of if it ever will be but without it they would not be able to launch enough satellites.

Their stupidity with AI and buying X mostly seems to be about scamming investors to make Musk even richer. Like this particular deal is just them doing what CoreWeave does at a SpaceX valuation.

Smoking crack and investment fraud.

With a light sprinkling of space.

Its main business is connectivity. Starlink generated over 10B last year.

Becoming a broader infrastructure company with xAI.

Government contracts. Dumping its shares on retail investors. Selling compute to AI vendors

A datacenter that also provides connectivity/Internet

Elon Musk.

How do you come to this conclusion? All it means is that spacex has compute and google does not.

Suppose tpus were theoretically a million times better, but cannot be produced due to supply chain constraints, this action would still be rational.

My personal take is that this really shows how bottlenecked the entire supply chain is. For such an important commodity there are shockingly few players ready for scale.

Kinda; while it does show that overall Google's proprietary chips etc. are not cutting it, it doesn't say if the problem is the hardware itself or the factories to make more of the hardware. Without more information, it could be that Google's hardware is 100x the energy efficiency per token, but they can only make enough hardware for 1% of the tokens there's currently demand for: 1% of your product being 0.01% of your costs isn't nothing, but it leaves the other 99% at full price.

Supply and demand? Bubblists seem to think there's an infinite supply of chips, power, and water to make as many chat bots as possible; physics, as usual, dictates limits.

Not necessarily, just that they don't have as many as they can make use of, and that xAI can't make more valuable use of them than renting them out.

Yes, it is issue of scale, google had to restrict usage because hardware are not available, regardless of what kind of hardware that is

Or it’s paying to make sure competition can’t buy said compute. Also isn’t Google an investor in SpaceX anyways?

At this point you are not buying a particular chip. You are buying whatever compute you can get.

It could be, or simply we are so far away into chip shortage that even google needs to buy from other people’s pot.

Its because none of the promised Data Center and NVIDIA hardware deployments described in NVDA earnings calls have actually happened. Once more Ed Zitron has the goods: https://youtu.be/zbKDmkJPVvI?t=482

Or alternatively there is simply a huge demand for compute and this is helping them fill a short-term need. Keep in mind if you saw in the article there is a 90-day cancellation clause. This is a nothing burger.

They overbuilt capacity for grok but no one wants to use grok for several reasons

Scarcity. It's becoming difficult to plan for new data centers. They will rent where capacity is available. Grok hasn't gain the expected popularity.

Other companies built data centers but also built products that soak up their data center capacity.

xAI built data centers, and products that are mostly good for nonconsensual porn and confirming a small group’s biases. So they have a lot of excess capacity, and might as well rent it to the adults.

No, CoreWeave for example also rent compute to the big AI companies. This likely just means Grok has few users so they need to rent their extra capacity to their competitors.

Plus it’s not like some absolutely enormous data centers, only 300MW.

Yes but someone will be along shortly to defuse what sounds like giving the bad mars man credit where it’s due. Like everything else he does that works out, it was just luck, timing, actually a mistake that worked out, or someone else behind the scenes that he got lucky in hiring at the right time (by accident).